Feb

4

Valuations, from Ralph Vince

February 4, 2019 |

I struggle to find an instance of equities being overvalued. This link shows not only my model for real-return adjusted earnings' linear relationship to the S&P ("model") but of particular interest the P/E of the S&P with respect to the P/E of the 30 year constant.

Gibbons Burke writes: 

What caused the quantum jump and return excursion of the SP_PE line (red) ~2010?

Earth Link writes: 

Earnings fell precipitously, particularly in the financial, energy, and materials sectors, during the 2007-8 financial crisis, and rebounded beginning in mid-late 2009. S&P GAAP earnings were negative in Q4 2008, and were also significantly lower than previous levels in Q3-2008 and Q1-2009, but by Q1-2011 had recovered to pre-crisis levels.


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